LEE CHI HANG AND OTHERS v. WELL DONE GARMENT FACTORY LTD AND ANOTHER

LEE CHI HANG AND OTHERS v. WELL DONE GARMENT FACTORY LTD AND ANOTHER

On the evidence (contemporaneous documents, admissions in probate administration, credible witnesses and neutral account clerk), the 1996 allotment was valid by consent at the 1996 EGM; WC had capacity and the 2001 transfers were valid and formed part of an intentional scheme transferring assets (including Macau account funds) to WYW with knowledge or assent of WSL and WWC; the moneys allegedly loaned by WWC and WSL were in fact funded from WYW’s Macau account, so plaintiffs’ loan claims fail, save that the estate must account for an unexplained balance of HK$2,569,000; MPF overpayment of HK$45,994.46 is repayable; diversion of business to New Co gives rise to a trust/constructive trust...

Citation
[2021] HKCFI 1835
Parties
1st Plaintiff (executors of the Estate of Wong Wai Chun): Lee Chi Hang and Wong Ying Kit Eddie; 2nd Plaintiff / 1st Plaintiff in HCA 913/2013: Wong Shiu Luen; 3rd Plaintiff (by Original Action) / Claimant (well Tai): Wong Shiu Luen trading as Well Tai Trading Company; 1st Defendant (original Action) / 2nd Defendant (hca 913/2013) / Counterclaim Plaintiff: Well Done Garment Factory Limited; 2nd Defendant (original Action) / 4th Defendant (hca 913/2013) / Counterclaim Plaintiff: Hongkong Welldone Garment Factory Company Limited; 3rd Plaintiff (by Counterclaim) / 1st Defendant (hca 913/2013): Wong Ying Wai; 2nd Plaintiff (deceased; Suing on Behalf of Shareholders / Estate Issues): Wong Wai Chun; 3rd Defendant (hca 913/2013): Wong Chun Kee Piece Goods Company Limited; 5th Defendant (hca 913/2013): Wonder Step Limited; 6th Defendant (hca 913/2013): Welldone Garment Company Limited; 2nd Plaintiff (hca 913/2013) (executor of the Estate): Lee Chi Hang; 2nd Plaintiff (hca 913/2013) (executor of the Estate): Wong Ying Kit Eddie
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
25 June 2021
Case Number
HCA465/2013
Procedural Posture
Consolidated Civil Actions (hca 227/2012; HCA 464/2013; HCA 465/2013 Consolidated; HCA 913/2013) / Judgment Following Trial in Court of First Instance (deputy High Court Judge MK Liu)
Outcome
Plaintiffs' substantive claims dismissed except limited orders: confirmation of 1996 allotment, estate ordered to account for unexplained balance and repay MPF; counterclaim partially allowed (confirmation of allotment and trust/accounting for diversion). Costs awarded to defendants.
Legal Topics
Share Allotment, Share Transfer, Derivative Action, Breach of Fiduciary Duty, Laches and Acquiescence, Trust Accounting, Loan Recovery, MPF Repayment, Diversion of Corporate Opportunities
Source Language
EN
Company Law Trusts and Fiduciary Duties Probate and Wills Civil Procedure Evidence Share Allotment Share Transfer Derivative Action +6 more

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Parties

Lee Chi Hang and Wong Ying Kit Eddie

1st Plaintiff (executors of the Estate of Wong Wai Chun)

Wong Shiu Luen

2nd Plaintiff / 1st Plaintiff in HCA 913/2013

Wong Shiu Luen trading as Well Tai Trading Company

3rd Plaintiff (by Original Action) / Claimant (well Tai)

Well Done Garment Factory Limited

1st Defendant (original Action) / 2nd Defendant (hca 913/2013) / Counterclaim Plaintiff

Hongkong Welldone Garment Factory Company Limited

2nd Defendant (original Action) / 4th Defendant (hca 913/2013) / Counterclaim Plaintiff

Wong Ying Wai

3rd Plaintiff (by Counterclaim) / 1st Defendant (hca 913/2013)

Wong Wai Chun

2nd Plaintiff (deceased; Suing on Behalf of Shareholders / Estate Issues)

Wong Chun Kee Piece Goods Company Limited

3rd Defendant (hca 913/2013)

Wonder Step Limited

5th Defendant (hca 913/2013)

Welldone Garment Company Limited

6th Defendant (hca 913/2013)

Lee Chi Hang

2nd Plaintiff (hca 913/2013) (executor of the Estate)

Wong Ying Kit Eddie

2nd Plaintiff (hca 913/2013) (executor of the Estate)

Procedural Posture

Consolidated Civil Actions (hca 227/2012; HCA 464/2013; HCA 465/2013 Consolidated; HCA 913/2013) / Judgment Following Trial in Court of First Instance (deputy High Court Judge MK Liu)

Legal Issues

  1. 1 Validity of 1996 allotment
  2. 2 Validity of 2001 share transfers
  3. 3 Mental capacity of transferor at time of transfers

Ratio Decidendi

On the evidence (contemporaneous documents, admissions in probate administration, credible witnesses and neutral account clerk), the 1996 allotment was valid by consent at the 1996 EGM; WC had capacity and the 2001 transfers were valid and formed part of an intentional scheme transferring assets (including Macau account funds) to WYW with knowledge or assent of WSL and WWC; the moneys allegedly loaned by WWC and WSL were in fact funded from WYW’s Macau account, so plaintiffs’ loan claims fail, save that the estate must account for an unexplained balance of HK$2,569,000; MPF overpayment of HK$45,994.46 is repayable; diversion of business to New Co gives rise to a trust/constructive trust...

Court Disposition

Plaintiffs' substantive claims dismissed except limited orders: confirmation of 1996 allotment, estate ordered to account for unexplained balance and repay MPF; counterclaim partially allowed (confirmation of allotment and trust/accounting for diversion). Costs awarded to defendants.

Orders

  • 1996 allotment declared valid and counterclaim confirming it is allowed
  • All of plaintiffs' claims in HCA 913/2013 dismissed except that New Co holds diverted profits on trust for Well Done and must account